Boeing is cutting production of 737 Max jets. Following two crashes since October, Boeing has slashed its monthly production of its aircraft by 20% and is likely to produce only 42 a month instead of 52. This is part of the company’s adjustment in the 737 production system that aims to focus on software certification and returning the MAX to flight.
The analysts expect the production is likely to weigh on shares of the company. But, so far Boeing’s shares have held up relatively well after initially dropping to more than 10% in mid-March following the crash of an Ethiopian Airlines 737 Max 8. This second 737 crash in six months had led to a grounding situation for the aircraft.
At the time, Boeing did not feel the need to cut production. But the crashes also led to an evaluation as well as fixing of the aircraft’s software system, for which it’s likely to seek approval from FAA and other international evaluators in the coming weeks. This means that the grounding situation may well extend till June.